Pet owners must be more bullish than ever on taking proper care of their four-legged family members, as represented in Chewy’s (CHWY) latest earnings beat. Shares of the online pet retailer are surging by over 25% on Wednesday morning as the company reports that first-quarter autoship sales — its automated or pre-scheduled deliveries of pet food and products — grew by 6.4% year-over-year.
Yahoo Finance Executive Editor Brian Sozzi joins Catalysts to interview Chewy CEO Sumit Singh, who describes the "normalization" he is seeing in the pet industry highlighted by demand tailwinds and more balanced pet adoption rates.
Through these trends and Chewy’s autoship model, "[we’re] able to attract the right type of consumers and get them to really spend on a repeat basis, we pass on value and we drive a ton of convenience and the overall value proposition is resonating really loudly," Singh says.
While inflation on pet food and pet products is seeing slight month-over-month declines, top pet brands maintain very high prices. "What we could expect the latter half of this year is incremental discounting," Singh says, " as both vendors and retailers lean into both incent demand generation as well as conversion."
Singh also addressed the loss of 95,000 active customers this quarter, Chewy’s business model for its new vet clinics, and how it aims to keep costs down for pet owners.
"Pet healthcare is expensive. [There’s] a couple of ways that you could bring cost down, for example, is the advent and the growth of the insurance category," Singh explains. "When you look at kind of European countries or all the way to Australia and New Zealand, insurance has penetrated to sub kind of teens or mid 20% ranges. In the United States. it’s sub 3%… but growing fast."
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